Ujjivan Small Finance Bank QIP, merger news: Shares of Ujjivan Small Finance Bank jumped two per cent to hit 52-week high in BSE intraday trade on Tuesday, a day after the bank on Monday launched its Qualified Institutional Placement (QIP). 

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In early trade on Tuesday, Ujjivan SFP share price jumped 2.1% to Rs 25.85 per share in BSE intraday trade. Ujjivan SFP share price has significantly risen in the past three months as the stock yielded a return of more than 55% during this period. Amid QIP news,  the stock jumped nearly 25% in the past one month as on September 13.  

Ujjivan Small Finance Bank QIP reason, deatils  

Ujjivan SFP launched the QIP with a floor price of Rs 21.93 per share to meet the regulatory requirement ahead of merger with its parent company.

In February this year, the lender had informed raising of up to Rs 600 crore by issuing shares to qualified institutional buyers in order to meet the regulatory requirements for amalgamation with its parent firm Ujjivan Financial Services. 

The Merger and Placement Committee of the board has, at its meeting held on September 12, 2022, passed resolutions for authorising the opening of the issue on Monday and approved the floor price for the issue at Rs 21.93 per equity share, Ujjivan SFB said in a regulatory filing. 

Floor price refers to the minimum price in a share issuance programme. 

Ujjivan SFB said a meeting of the Merger and Placement Committee of the board is scheduled to be held on September 15, 2022 to consider and approve the issue price, including any discount. 

An amalgamation scheme between the bank and its promoter Ujjivan Financial Services Ltd (USFL) was passed by their respective boards of directors, shareholders and creditors in October 2021. 

The bank has already sought Sebi nod for a scheme of amalgamation to achieve the Minimum Public Shareholding (MPS). 

Ujjivan SFB had said its board evaluated various methods to achieve the MPS by reducing USFL's holding in the bank from the present 83.32 per cent to 75 per cent or lower. 

RBI guidelines on small finance banks 

As per RBI guidelines on small finance banks, it is mandatory for the promoter to reduce the stake in the subsidiary to 40 per cent within five years of commencement of operations by the SFB. Ujjivan SFB commenced operations in February 2017.